What Happened to the Consolidated Relief Allowance (CRA) in Nigeria?

The Consolidated Relief Allowance (CRA) has been completely abolished under the Nigeria Tax Act 2025, effective January 1, 2026. Under the old system, every Nigerian employee automatically received a tax relief of 20% of gross income plus ₦200,000. It has been replaced by the Rent Relief Allowance under Section 30(2)(a)(vi), which allows only renters to deduct 20% of annual rent paid, capped at ₦500,000. If you do not pay rent, you get no personal relief under the new system.

Quick Summary

• CRA is gone — completely abolished under the NTA 2025 from January 1, 2026
• Old CRA formula — 20% of gross income plus ₦200,000, available to every employee automatically
• What replaced it — Rent Relief Allowance: 20% of annual rent paid, capped at ₦500,000
• Who benefits from the new system — only people who pay rent for residential accommodation
• Who lost out — homeowners, people living rent-free, and high earners who gained more from the CRA
• What you need to claim rent relief — proof of actual rent paid: tenancy agreement and receipts

Also read: Understanding the Nigeria Tax Act 2025: What Changed — for the full picture of every major change in the new law

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If you have been working in Nigeria for any length of time, you have probably heard the term CRA — Consolidated Relief Allowance. It was the tax break that quietly sat in your payslip calculation every month, reducing your taxable income and putting more money in your pocket without you having to do anything.

As of January 1, 2026, it no longer exists.

The Nigeria Tax Act 2025 abolished the CRA completely. No transition period, no partial replacement — it is gone. And in its place is something different, something more targeted, and for some Nigerians, something significantly less generous.

If you are confused about what this means for your take-home pay, you are not alone. This is one of the most searched tax questions in Nigeria right now. This article explains exactly what the CRA was, why it mattered, what replaced it, and how to figure out whether you are better or worse off under the new system.

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What the CRA Was and Why It Mattered

The Consolidated Relief Allowance was introduced under the Personal Income Tax Act (PITA) and became one of the most significant personal tax reliefs in Nigeria's history. Every Nigerian employee and self-employed individual was entitled to subtract the CRA from their gross income before tax was calculated.

The formula: you received the higher of ₦200,000 or 1% of your gross income, plus an additional 20% of your gross income. For almost every Nigerian taxpayer, this meant 20% of gross income plus ₦200,000.

Here is what that looked like in practice. If you earned ₦3 million a year, your CRA was 20% of ₦3 million plus ₦200,000 — which equals ₦800,000. That ₦800,000 was subtracted from your gross income before tax was calculated, meaning you were only taxed on ₦2.2 million instead of the full ₦3 million.

For higher earners the benefit was even more substantial. Someone earning ₦10 million a year received a CRA of ₦2.2 million. The government was taxing them on ₦7.8 million instead of ₦10 million.

The CRA did not require you to do anything. It was automatically applied to every taxpayer's calculation regardless of their circumstances. That universal nature was both its biggest strength and ultimately part of the reason it was replaced.

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Why the Government Abolished It

The government has not formally published a detailed explanation. But based on the NTA's overall design and analysis from KPMG, Mondaq, and Forvis Mazars, the reasoning points in a clear direction.

The CRA was universal. It applied the same way to a cleaner earning ₦1.2 million a year and a director earning ₦50 million a year. The 20% formula meant that the higher your income, the more you benefited in absolute naira terms. A high earner received a much larger deduction simply because they earned more — not because they needed the protection more.

The new system is designed to be more targeted. Instead of giving everyone an automatic relief based on gross income, the government tied the relief directly to an actual expense — rent. The logic: housing is one of the most significant costs for ordinary Nigerians, and a relief linked to what you actually pay for shelter is more equitable than one linked to how much you earn.

There is also a compliance angle. By requiring people to declare and prove actual rent paid, the government is building a paper trail that helps expand the tax base.

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Not sure whether you are better or worse off under the new system? Taxidy calculates your exact tax liability under the NTA 2025 — showing you what you owe, what you can claim, and what changed from last year.

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What Replaced the CRA: The Rent Relief Allowance

Section 30(2)(a)(vi) of the Nigeria Tax Act 2025 introduces the Rent Relief Allowance as the replacement for the CRA. Here is exactly what it says, verified directly from the Act:

"Rent relief of 20% of annual rent paid, subject to a maximum of ₦500,000, whichever is lower, provided that the individual accurately declares the actual amount of rent paid and other relevant information as may be prescribed by the relevant tax authority."

In plain terms: if you pay rent for the residential property you live in, you can deduct 20% of your annual rent from your taxable income, up to a maximum of ₦500,000 per year.

Examples to make this concrete:

• Annual rent of ₦600,000 — 20% is ₦120,000. Your deduction is ₦120,000.
• Annual rent of ₦1,500,000 — 20% is ₦300,000. Your deduction is ₦300,000.
• Annual rent of ₦2,500,000 — 20% is ₦500,000. Your deduction is ₦500,000 — the cap.
• Annual rent of ₦4,000,000 — 20% is ₦800,000. But the cap is ₦500,000, so your deduction is still ₦500,000.

The maximum benefit anyone can get from the rent relief is ₦500,000 per year, no matter how high their rent is.

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Who Benefits and Who Does Not

Who benefits from the new system:

• Low and middle income earners who pay rent and previously had smaller CRA deductions
• People whose rent is relatively high compared to their income

Who does not benefit — or is worse off:

• Homeowners — you own the property you live in, pay no rent, and therefore get no rent relief. Under the CRA you received an automatic deduction regardless.
• People living rent-free — if you live with family, in employer-provided accommodation, or any arrangement where you do not personally pay rent, you do not qualify.
• High earners who paid rent — under the CRA, a ₦10 million earner received ₦2.2 million in relief. Under the rent relief, the maximum is ₦500,000. That is a significant increase in taxable income.

KPMG Nigeria specifically flagged this: "The removal of the Consolidated Relief Allowance will raise the effective tax rate for employees, creating higher costs for employers in respect of tax-equalised employees."

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How to Claim the Rent Relief

Unlike the CRA which was automatic, the rent relief must be actively claimed. Section 31 of the NTA is explicit: deductions shall not be allowed unless claimed in writing in the form prescribed by the relevant tax authority. Section 32 adds that the tax authority may require documentary evidence.

Here is what you need:

• A valid tenancy agreement showing your name, property address, rent amount, and the period it covers.
• Proof of payment — bank transfer records, receipts from your landlord, or any documentation confirming you paid the rent.
• An accurate declaration — declare the actual amount of rent paid to your employer for PAYE purposes, or to the NRS when filing your self-assessment return.

If you are a salaried employee, speak to your HR or payroll team immediately. Ask them to confirm that rent relief is being factored into your PAYE calculation and provide your documentation. If your employer is not applying it, you are overpaying tax every single month.

Also read Tax Deductions in Nigeria 2025: 5 Claims Most Nigerians Are Missing — for other deductions you may be missing beyond rent relief

Also read  Freelancers in Nigeria: Are You Overpaying Tax?— for self-employed readers on how to claim rent relief alongside other business deductions

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Comparing the Old and the New: Which Was Better for You?

Scenario 1: Emeka earns ₦2.4 million a year and pays ₦600,000 in rent

Under the old CRA: deduction was 20% of ₦2.4 million plus ₦200,000 = ₦680,000. Taxable income: ₦1.72 million.

Under the new system: rent relief is 20% of ₦600,000 = ₦120,000. But the ₦800,000 zero-tax band shelters his first ₦800,000. Combined with the progressive bands, Emeka is likely in a similar position or slightly better.

Scenario 2: Ngozi earns ₦8 million a year and owns her home

Under the old CRA: deduction was 20% of ₦8 million plus ₦200,000 = ₦1.8 million. Taxable income: ₦6.2 million.

Under the new system: she owns her home and pays no rent, so she gets no rent relief. Ngozi is worse off.

Scenario 3: Tunde earns ₦15 million a year and pays ₦2.4 million in rent

Under the old CRA: deduction was 20% of ₦15 million plus ₦200,000 = ₦3.2 million. Taxable income: ₦11.8 million.

Under the new system: rent relief is 20% of ₦2.4 million = ₦480,000. His taxable income is significantly higher than under the old system. Tunde is considerably worse off.

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The Bottom Line

The CRA was a broad, universal relief that benefited everyone automatically. The Rent Relief Allowance is targeted, conditional, and capped. Whether that is fair depends on your perspective, but what matters practically is understanding which category you fall into and acting accordingly.

If you pay rent, claim the relief. Provide your documentation to your employer or file it yourself. Do not leave money on the table.

If you own your home or live rent-free, you have lost the personal relief you used to have. The only available relief under the new system is the ₦800,000 zero-tax band and whatever other deductions apply to your specific situation.

And if you are confused about whether you are better or worse off, run the numbers for your specific income and rent situation. The comparison is the only way to know for certain.

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The switch from CRA to Rent Relief has changed how much tax millions of Nigerians owe — and most people do not know which side they are on. Taxidy shows you exactly how the new system affects your take-home pay and helps you claim every relief you are entitled to. → See How the New System Affects You on Taxidy

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Taxidy is built by Nigerians who understand exactly how confusing this system is.

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Sources: Nigeria Tax Act 2025, Section 30(2)(a)(vi), 31, 32. Verified against official NTA 2025 document. Additional reference: KPMG Nigeria Flash Alert 2025-168, Mondaq Nigeria, Forvis Mazars Nigeria, PaidHR Nigeria.